Question

The following transactions took place for Smart Solutions inc c. July 1 to $75. to p lore of the co . Dec. 31 Recrund interest on the note n ceived a year, 30 percentate interest has been recorded since December 31.) c. Duty July Received interest on the note 1 Received principal on the te Required: Prepare the journal entries that Smart Solutions in would record for the above transactions. If no entry is required for a transaction/event, select "No Journal Entry Required in the first account field.) View transaction list Journal entry worksheet Record the receipt of a note on July 1, 2017 for a $76,000 loan to an employee Note Enter det bare et Cameron DeeCredit Date 01. 2017 < Prey 5 of 18 Next >

Answer 1

The journal entries for Smart Solutions Inc. are recorded below:

Date	Account, Titles, and Explanation	Debit	Credit
July 1, 2017	Notes Receivable	$76,000
	Cash		$76,000
	(to record the issuance of a loan to an employee)
December 31, 2017	Interest receivable	$3,800
	Interest revenue		$3,800
	( to record the accrued interest)
July 1, 2017	Cash	$7,600
	Interest receivable		$3,800
	Interest revenue		$3,800
	(to record the cash receipt of interest )
July 1, 2018	Cash	$76,000
	Notes receivable		$76,000
	(to record the receipt of note)

Working note 1:

On December 31, 2017

Interest is accrued for 6 months (July 1- December 31, 2017)

Interest receivable = $76,000 * 10% * 6 /12

Interest receivable = $3,800

Working note 2:

On July 1, 2018

The interest is recognized for 6 months (January 1 - July 1, 2018)

Interest revenue = $76,000 * 10% * 6 /12

Interest revenue = $3,800